Gene Poole Co. issued $10,000 of bonds on January 1, 2018. The bonds pay interest semiannually. This is a partial bond amortization schedule for the bonds. What is the book value of the bonds on December 31, 2019?

Question

Gene Poole Co. issued $10,000 of bonds on January 1, 2018. The bonds pay interest semiannually. This is a partial bond amortization schedule for the bonds.  What is the book value of the bonds on December 31, 2019?

Quizplus · Accepted Answer

Semiannual effective rate = $409 / $9,080 = 0.045
Interest expense = $409 + ($9,107 × 4.5%) = $819
Cash Payment 4 = ($9,107 × 4.5%) - $400 = $10
Book value = $9,107 + $10 = $9,117